“Rise of renewables adds to need for gas power”: FT.

FT: “Something odd is happening at Europe’s big energy companies. They have stopped complaining so much about renewable energy subsidies.”“Not that long ago barely a month passed without someone from France’s GDF Suez or Germany’s Eon grumbling that unaffordable support for green energy was eating into the profits of their fossil fuel plants – or increasing the risk of the lights going out.
It was easy to see why. Those subsidies helped to nearly triple the amount of EU wind and solar generating capacity being installed in the space of six years. Renewables accounted for a quarter of Germany’s electricity production last year, up from 7 per cent in 2000 – an extraordinary shift in one of the world’s largest and most advanced industrialised economies. Even the UK got 15 per cent of its power from renewables last year, up from 11 per cent in 2012.
This new power supply was not supposed to displace conventional electricity immediately. It was thought that demand would keep growing enough for renewables simply to take a share of a wider expanding market. But that was before the eurozone crisis. Demand fell and wind and solar plants, which have low marginal costs, were able to displace traditional gas and coal generators – and drive down wholesale power prices.
….All of this is bad news on several fronts. It threatens security of supply, gives rise to more carbon emissions, and makes it tricky to operate a grid using lots of intermittent renewable energy sources. Unlike most coal plants, gas power stations can be turned on and off relatively quickly, making them ideal for filling in supply gaps on cloudy or windless days when renewables falter.
In other words the rise of renewables has made gas power more necessary, at precisely the time gas plants are struggling – partly because of renewables.
…..However, the companies themselves have been far less vocal in their complaints of late – which may reflect their successful lobbying for cuts to renewables subsidies. Several countries have implemented cuts and, in January, Brussels went one better by abandoning legally binding renewable energy targets for individual countries, in favour of a looser EU-wide goal.….More help is on the way for the traditional generators. After years of subsidising wind and solar plants, at least five EU countries – including Germany, France and the UK, the three largest economies – have drawn up plans to support conventional generators in order to secure electricity supplies.
These plans, which differ from country to country, are collectively referred to as “capacity mechanisms” because they are broadly designed to pay companies for having the capacity to generate power when needed – not for amounts produced. In several cases the aim is to incentivise investment in new gas plants. Some countries have adopted similar measures for other reasons, but they were always the exception not the rule. This year that may change.
Until last month it was not clear whether the latest capacity mechanism proposals would meet European Commission state aid guidelines. But two weeks ago Brussels approved the first one, in the UK. According to a report on this trend by Linklaters, the law firm, more are likely – even though a patchwork of distortive national measures may make hopes for a unified EU energy market even more distant. One thing is immediately clear, though: as with renewables, energy consumers will be left to pick up the tab.”